Moat or Speculation Trap? The DAT Model's Life and Death

Author: Zhou, ChainCatcher

The digital asset treasury (DAT) model was once seen as an innovative approach to crypto investment. Companies used crypto assets as reserves to drive stock price increases, creating a "buy tokens, raise funds, and buy more tokens" flywheel.

However, market sentiment now seems to be shifting. On the one hand, DAT companies have raised over $20 billion in cumulative funding this year, leading some institutional investors to believe the peak has passed. On the other hand, with growing short-selling concerns, investors are beginning to question whether a collective rush to buy is underway and whether the treasury model is a long-term moat or a short-term speculative tool.

This article discusses topics of particular concern to investors and interviews and summarizes the views of several institutions on current DAT trends.

Are DAT stocks worth investing in? When evaluating DAT stocks, ordinary investors often wonder whether they are better than directly holding cryptocurrencies or indirectly gaining exposure through ETFs. DAT company stocks provide leverage. For example, according to Portfolio Visualizer data, assuming a starting investment of $10,000, between August 2020 and August 2025, Bitcoin rose to $102,229, while MSTR soared to $324,290. MSTR's higher volatility (114% vs. 65.6%) and annualized returns (100.5% vs. 59.2%) give it a higher Sharpe ratio than Bitcoin. This is, of course, due to the company's debt financing to amplify its Bitcoin holdings. Justin Sun has publicly stated that traditional ETFs provide exposure to cryptocurrency prices, but that's all. DATs go a step further: they put assets to work. Rather than sitting idle, these DATs stake, lend, and deploy capital in DeFi and yield farming protocols, earning real returns while maintaining full on-chain transparency. This model transforms digital assets from speculative holdings into efficient financial engines, significantly outperforming ETFs. However, Forbes analyst Alexander Blume stated that DATs use highly complex financial products to exploit retail speculation, debt instruments, marketing strategies, and legal and judicial arbitrage in the hope of outperforming Bitcoin. Some of these strategies face black swan-style risks, where they appear to perform well until suddenly failing. CoinShares states that DAT stocks carry higher risk than ETFs because they are influenced not only by cryptocurrency prices but also by company operations and debt burdens. This emerging model carries some risks that may be masked by the current bull market. Companies that pursue altcoins or memecoins but lack sustainable core businesses expose investors to higher volatility and uncertainty. If prices stagnate or decline, these companies can quickly become overleveraged and vulnerable to sharp pullbacks. In contrast, buying the coins directly offers full ownership but also comes with the complexities of custody and taxation. ETFs lower the barrier to entry for cryptocurrency investors, requiring an annual fee (typically 0.25%) and convenient trading, but lack leverage. The Halborn advisory team noted that while DATs are suitable for investors seeking high returns, ETFs are more suitable for risk-averse investors because they offer greater diversification and mitigate the risk of a single company going bankrupt. According to rough estimates, in September 2025, DAT stock saw an average 150% increase in the 24 hours following the announcement of its reserve, attracting short-term capital. However, this carries with it risks. Since the second half of 2025, Metaplanet's stock price has plummeted by over 70%, its market capitalization falling below the value of its Bitcoin reserve, and its mNAV ratio has fallen to 0.99, demonstrating a clear lack of market confidence. How long can the Treasury trend last? What is the value of Treasury Coin itself? Since MicroStrategy initiated the Treasury trend, many companies have followed suit. By 2025, more than 160 listed companies worldwide had included cryptocurrencies such as Bitcoin and Ethereum on their balance sheets, with a total holding value exceeding US$240 billion. As of October 6th, global listed companies (excluding mining companies) held a total of 864,210 Bitcoins, with a current market value of approximately $107.43 billion, accounting for 4.34% of Bitcoin's circulating market capitalization. The influx of traditional capital has pushed up valuations and sparked concerns about a bubble. Peter Chung, head of research at Presto, stated that while the risk of a treasury company collapse is real, it is more subtle than the crashes seen during the last cryptocurrency boom and bust cycle. As premiums narrow and mainstream assets are covered, investors are shifting their focus to execution, scaling, and mergers and acquisitions. This is crowding out traditional crypto startup financing, raising questions about the sustainability of the DAT trend. Industry experts predict that large companies, including well-known tech giants, will begin building Bitcoin positions by the end of 2025. For both small and medium-sized enterprises and large corporations, the question has shifted from "if" to "when." Patrick PAN, Head of Web3 Business at Huaxing Capital, told ChainCatcher that any emerging market undergoes a cycle of "professional institutions leading the charge, small and medium-sized players entering the market, survival of the fittest, and subsequent concentration." Currently, most small and medium-sized DATs are still in the "experimental phase," which is positive for market education. Ultimately, however, only leading financial institutions with transparent compliance, a clear capital structure, and a stable return model will be able to survive in the long term. This year, the trend has been to diversify DATs, expanding their currency selection from Bitcoin to include ETH, Solana, BNB, and even altcoins like XRP, AVAX, ENA, IP, and Dogecoin. Patrick PAN stated that this is actually a process of natural market selection. In the short term, some smaller currencies are included to boost returns or test the waters, but in the long run, high-quality assets will continue to dominate. However, Elementus analysts have noted that companies investing in altcoin reserves face additional risks, as they are less diversified bets. During market crashes, altcoins typically have a higher correlation with Bitcoin, but in some cases, they may not equally share Bitcoin's "high-quality asset migration" status. Is the treasury a moat or a harvester? How do you view the risks of speculation? Currently, DATs are experiencing substantial unrealized gains. For example, Strategy's Bitcoin holdings still boast over $24.5 billion in unrealized gains, with a return of 51.91% to date. Is there a possibility that these treasury companies are cashing in on their profits prematurely? Short-selling firm Kerrisdale Capital announced on the X platform that it had shorted shares of Bitmine, the Ethereum Treasury Reserve, arguing that the so-called DAT model has become mediocre and uninspired. The firm stated that scarcity and meme-like enthusiasm once kept premiums high despite dilution, but these conditions have disappeared. It is reported that BitMine has continued to purchase Ethereum since the October 11th crash, having increased its holdings by nearly 380,000 Ethereum, valued at approximately $1.5 billion, bringing its total holdings to over 3 million. Currently, treasury companies still play a major buying role in the crypto market, but as their net assets shrink with price declines, their ability to add additional funds is limited, and the intensity of marginal buying has decreased. Institutions predict that new projects will continue to be launched by the beginning of next year, but the financing amounts will be smaller. As for the massive DAT financings, which can reach $500 million to $1 billion or more, only a handful of participants with high market capitalizations and volatility sufficient to support convertible bonds can actually raise these funds. Bit Digital CEO Sam Tabar stated during the Token 2049 Summit in Singapore that Digital Asset Treasury (DAT) companies should consider unsecured debt financing instead of secured debt to better withstand potential bear markets. Debt financing is the most efficient way to increase per-share crypto holdings. While increasing crypto holdings while maintaining equity is beneficial, choosing the right type of financing is crucial—the wrong leverage can destroy a business. According to Presto, only one-third of DAT companies' financing is through debt financing, and 87% of this debt is unsecured. Chung believes that even in the worst-case scenario, the proportion of underlying collateral is far lower than the leverage level of the 2021 cycle, so as long as this principle is adhered to, margin calls are unlikely to cause systemic liquidation risks. He pointed out that this does not mean that cryptocurrency fund managers will never sell their cryptocurrency holdings. In unforeseen circumstances, if cash is urgently needed and there are no other sources of funds, cryptocurrency fund managers may liquidate these assets. How do treasury companies buffer risks when the crypto market declines? Vicky Wang, president of Amber Premium (NASDAQ: AMBR), a digital asset wealth management platform, stated in an interview with ChainCatcher that the key to a downturn lies not in "betting on the direction" but in a systematic "defense-adjustment-safeguard" approach: from asset and liquidity volatility management, to stabilizing the mNAV anchor through disciplined rebalancing and valuation deviation management, to layered custody and transparent disclosure, all to minimize operational risk and information asymmetry. Meanwhile, the DAT strategy spectrum is rapidly diverging: single-currency exposure relies more on long-term narratives and pressure-bearing capabilities, multi-currency portfolios test correlation and rebalancing mechanisms, and strategies for more complex structures require a specialized skill set across derivatives, liquidity, accounting, and compliance. Regarding short-term speculative risks, Vicky Wang stated that this is not a sustainable path. The success of a DAT depends on the long-term investment value of its underlying assets. The strong cyclicality of the crypto market means that most DATs will experience ups and downs together, and navigating these cycles relies on a dual-track governance model of "cognition and mechanisms." Conclusion: Overall, DAT stocks are suitable for investors seeking high returns, while the trend of treasury financing to purchase tokens depends on the financing capabilities (cost and method) of each company. If these companies focus on long-term governance, DATs can serve as a defensive moat; otherwise, they can become a speculative trap. Excellent treasury companies don't simply chase coin price beta; instead, they maintain a long-term positive premium to their mNAV through operations and governance. Crypto investors should focus on companies with solid fundamentals and carefully evaluate drawdown and cash-out strategies.